Looking back and ahead - hotel IT consolidation

In 2015, the hospitality industry continued to see a rush in consolidation of both hotels and the technology implemented within. This focus will intensify as we move into 2016 as hoteliers and customers continue to evaluate their offerings. Customers have come to expect a high degree of standardization in technology, and a failure to implement that effectively will be the downfall of a brand. The purchase of Itesso by Amadeus last summer was yet another example of how GDSes are attempting to understand the customer across multiple channels all in real-time. Amadeus itself released a report on how data analytics and artificial intelligence technologies will be used to increase online reservations, improve the return on marketing spend and better understand guest preferences and build stronger customer relationships. Customer preferences and insights need to be anticipated and actioned in the right manner and appropriate channel. I am starting to see that companies are investing in data analytics. I anticipate that this rapid growth will continue throughout 2016, both organically and through acquisitions, especially around artificial intelligence (AI). AI technologies utilize powerful algorithms to determine the most appropriate action, such as how to determine the most appropriate media to focus advertising spend or how to enhance a hotel’s revenue management system by dynamically changing room rates. Differently from the past, hotels need to apply this in a holistic manner across all touch-points and channels, such as social media, mobile, ad exchanges, and contact centres to drive business improvements, enhance guests’ experiences, and deliver powerful results. The hoteliers’ ability to keep up with rapid technology changes and embrace the latest technologies will differentiate successful hotels organizations in 2016.

In the world of hospitality distribution, 2015 was clearly a year of consolidation and investment across the industry. The big acquisitions we saw this year show that the world’s online travel agencies and global distribution systems take hospitality technology extremely seriously. 2016 is the year we need to add some order to the insanity of trying to absorb, integrate and take cost out. Driven by traveler demands for better data structure and persona-based content, we are seeing a push by all sides for distribution channels to offer a lot more than just room inventory. Travelers want to book their spa treatments, make restaurant reservations and visit surrounding points of interest and activities all with the same click of a button. It’s a fast-changing landscape, and I don’t see the demand of ‘more for less’ slowing down anytime soon. Hotel company IT departments are continuously required to deliver more functionality along with measurable benefits to the bottom line -- all with fewer resources and on shorter timelines. They are also faced with what we at DHISCO call “direct-connect” fatigue. Think about it: Hundreds of distribution channels have been integrated in our industry. A single hotel company may have to connect with 20 new alternative distribution partners every year and make adjustments to the existing and often antiquated legacy systems of more than 30 GDS and OTA partners. That’s just the normal work and churn. Exhausting, isn’t it? In 2016, we’re going to see an increasing number of inventive new business models pop up that will add to this churn and put even more demands on legacy hotel systems. And, that will be compounded by the integration efforts of the big guys which will, by definition, end up with compromise in functionality somewhere along the process chain. That’s the insanity that lies ahead. But insanity is what drives the technology industry. 2016 will be the year we make great strides in taking distribution to the next level with technology that will make it easier to integrate the fast-growing list of partners while enabling them to deliver these persona-based, property-level services to booking platforms. We are also going to see the industry move away from cost-per-click metasearch systems into commissionable “book now” concepts. Solving daunting industry problems is fun. And 2016 will be very fun!

We live in an era when data is more plentiful and more freely available than at any time in history. Every technology we touch in our lives generates data, and there is an ever more complex array of apps to analyze and derive value from the data we generate.  Yet some of the most important data remains surprisingly hard for hotel operators to access.    Revenue Management (RM) is a prime example. RM systems have been in mass-adoption since the 1990s, with thousands of hotels reaping rich rewards as a result of using the technology.  A RM system is a powerful tool, but for many revenue managers it’s too much of a black box. For some time we’ve been seeing a desire to understand what’s behind the trends that the RM algorithms are predicting.   To get to that level of insight, we have to step out of the traditional purview of RM systems and into the world of RM-centric business intelligence.  For example, to understand fully how a particular discount product or corporate account is truly contributing to your performance, a revenue manager needs the easiest possible access to analytical tools that deliver insights at the most granular (i.e. rate-code, individual guest) level.  This level of analysis has never been seen as a core part of the RM process, but through 2015 we see an ever increasing appetite for it among savvier operators.   But here’s the problem. Historically, the only organizations in the hotel industry with deep enough pockets to do BI projects have been chains. So operators came to see the data that’s critical to RM in a manner pre-determined by their franchisors.  And that creates an issue, for example, when an operator has a multi-chain hotel portfolio. In this case, all information has to be viewed through different lenses depending on the brand flag, so critical performance information is inconsistent and, in many cases, inflexible.   The root cause of this problem is that building in-house BI platforms is expensive. But that has changed.  A growing trend over the last few years has been the rise of “out-of-the-box” BI tools that are flexible, affordable, and vastly easier to deploy than BI platforms that are built in-house.  The rise of apps like these, and the move towards cloud computing are making the idea of the home-built BI platform look like more and more of an anachronism.   Cheaper, more flexible out-of-the-box technologies, coupled with cloud platforms are putting great analytical tools into the hands of hotel operators who were previously completely dependent on their franchisors for this information.  We call this trend the democratization of sophistication, and we see it continuing to gather momentum through 2016 and beyond.